COLUMBIA v. OMNI OUTDOOR ADVERTISING, INC.
Legal provision: Sherman
Argument of Joel I. Klein
Chief Justice Rehnquist: We'll hear argument first this morning in No. 89-1671, The City of Columbia and Columbia Outdoor Advertising v. Omni Outdoor Advertising.
Mr. Klein: Mr. Chief Justice, and may it please the Court:
Petitioners, The City of Columbia, South Carolina and COA, a private billboard company were found to have violated the antitrust laws by conspiring to restrain competition through the passage of two zoning ordinances.
The principal question presented is whether such ordinances, even though they satisfy this Court's test in Town of Hallie, can nevertheless violate the antitrust laws if their enactment was motivated by the city's desire to benefit a private business rather than the public at large.
We submit that they cannot for two related reasons.
First, municipal regulation that meets the Hallie test is deemed to be the sovereign action of the State and under Parker such action is exempt from the antitrust laws regardless of legislative motive and, second, under the Noerr-Pennington Doctrine, the Sherman Act likewise doesn't apply to a private party's successful effort to seek such an ordinance.
If I may then begin with the judgment against the city.
The scope of the Parker doctrine was set out... the scope of the State action exemption, excuse me, was set out in Parker where the court made plain that the Sherman Act doesn't cover a market restraint imposed by the State as sovereign.
I want to emphasize that that's a generic exception based on the source of the restraint.
This Court has repeatedly made that very point, including recently in Hoover v. Ronwin, where it stated that quote
"when a State legislature adopts legislation, its actions ipso facto are exempt from the antitrust laws. "
Indeed in Ronwin itself, the court squarely rejected an exception to Parker based on the kind of claim at issue here.
In that instance that a private bar association and a State supreme court had conspired to take action motivated by a desire to protect the economic interests of lawyers.
Now if we agree that had South Carolina passed this statute, if would be exempt.
The question remaining is whether the city is entitled to a lesser measure of Parker protection.
We think the answer to that question--
Unknown Speaker: What do you think would have happened if the court of appeals would have held if the State had passed this statute?
Mr. Klein: --My, my understanding from the rationale is that they would have reached the same result.
Unknown Speaker: Exactly.
Mr. Klein: That is my view.
Unknown Speaker: Well, then if you say we all agree, we've already decided the case.
Mr. Klein: Well, I, I think that is the answer.
Unknown Speaker: So you shouldn't say that.
Mr. Klein: Well, I think, Your Honor, though that there are two questions.
First, is this the same as the State?
And I think there is at least some suggestion been made that it isn't.
But I do think if it is--
Unknown Speaker: --But the court of appeals would have reached the same--
Mr. Klein: --That, that is my view.
Unknown Speaker: --All right.
All right, then.
Mr. Klein: And I think the answer is as you suggest, Justice White, that that's what Town of Hallie compels.
Hallie says in a court of appeals felt... ruled that it was met here... Hallie says that once a municipal ordinance passes its test, it is in fact the sovereign action of the State.
That's what the analysis calls for.
Once that's so, as Justice White has just suggested, that cities get the same measure of Parker protection as do the States and for each that measure of protection doesn't turn on the hows or the whys behind the particular ordinance.
Now the court of appeals... correctly as you point out, Justice White... took the contrary view and it fashioned a rule, that is, it found an exception to Parker based on the notion that Congress wanted to strike down governmental action when taken for the wrong motives.
We simply don't think that's a plausible view for several reasons.
First of all, by making antitrust liability turn on the political process, the Fourth Circuit has read into the Sherman Act an intent to regulate politics.
But this Court has already made clear Congress had no such intent.
Unknown Speaker: Well, what if the city council had been bribed?
Mr. Klein: Your Honor, our view is that if the city council had been bribed that would not be an antitrust violation.
And that is--
Unknown Speaker: So you would say that Parker still applies?
Mr. Klein: --Absolutely.
Unknown Speaker: Sure.
Mr. Klein: And we think that for several reasons.
Unknown Speaker: I think you have to say that, I take it, on your theory.
Mr. Klein: --Under my first theory I have to say it.
My second theory, Justice White, which, which I don't think the Court need reach, is that this case doesn't involve bribery at all.
But in any case I, my first position is as you suggest.
And I say that for several reasons.
One, bribery is a political issue.
It's a political question and the Court has already said the Sherman Act doesn't regulate politics.
Second, once you open up this kind of exception you're going to totally undermine the rationale of Parker itself.
In that case, of course, the Court explained that in the absence of a clear indication from Congress, it was not prepared, it would be inappropriate to conclude that the antitrust laws meant to restrict a State's sovereign prerogatives.
Yet that's precisely what an inquiry based on governmental motive would do.
Let's take, for example, the kind of zoning ordinance at issue in this case.
That ordinance obviously serves, such ordinances routinely serve a public purpose.
Yet, they necessarily restrain trade, because by definition they restrict supply.
Given that set of circumstances it's no surprise that a private party--
Unknown Speaker: But Mr. Klein, do you think that the zoning power would give the city the authority to grant a exclusive franchise in the billboard advertising field to a particular company?
Mr. Klein: --I, I think it might, Your Honor.
It's a question that is I think the city would have that power under South Carolina law.
Now then the question would be whether it acts--
Unknown Speaker: You think it has the power to grant... say it was given an exclusive franchise in all the restaurants in town so that presumably it could zone restaurants.
It could have given an exclusive franchise to one chain of restaurants, say no other chains can come into the town.
Mr. Klein: --No question that would, that would violate the commerce clause presumably--
Unknown Speaker: Well, what about the antitrust law?
Mr. Klein: --I don't believe it would if it was properly authorized under Hallie.
Unknown Speaker: Well, but would it be properly authorized under Hallie simply because the State had give the city the zoning power?
Would the zoning power... could it be properly used within Hallie to grant exclusive franchises to various kinds of businesses?
Mr. Klein: I think it could.
I think the inquiry under Hallie is... in order to protect those zoning interests... in other words the basic interests in restricting undue clutter and so forth--
Unknown Speaker: That you can give them... give all the business to one particular--
Mr. Klein: --The city would take that approach consistent with the antitrust laws.
Unknown Speaker: --Mr. Klein, what you said about bribery suggested to me a question similar to Justice Stevens'.
I don't know what the law is but suppose you have, suppose you have a State that says that a, a bribed official act is invalid?
Suppose that's the law of a particular State, therefore it's not State action.
Mr. Klein: I think--
Unknown Speaker: It's invalid.
It's not State action.
Would that be a violation of the antitrust laws then?
Mr. Klein: --I think it wouldn't be because frankly... if I can fight the premise, Justice Scalia... I don't think that it wouldn't be State action.
In fact, if I refer you to the Bates case, this Court found that that action there was protected by Parker even though it violated the First Amendment.
That is the validity well known under State law, of a State... of an action.
It doesn't test State action.
I mean that's of course the whole rationale of Monroe v. Peyton and so forth.
So I don't think it turns on that kind of inquiry.
Unknown Speaker: Well, it doesn't, it doesn't determine what State action for those constitutional purposes, but it might well determine what States... what is State action for purposes of Parker.
Mr. Klein: But, but I, I don't think that's consistent with Bates and frankly that is, I think, that's flatly what the Court held in Bates.
But frankly I think it would be an impossible rule.
What it would mean, Justice Scalia, is that whenever you have an antitrust case, the first issue would be this kind of case.
Did the State... did the city violate State law or did the State violate State law?
Sometimes that's going to turn on a jury trial.
Sometimes it's going to be a procedural default, so antitrust courts would be in the business of essentially having a State case first as a prerequisite to jurisdiction and I don't think that makes any sense.
Now the other thing I want to suggest aside from the fact that once you allow... once you acknowledge that zoning laws are going to lead to people who benefit from them lobbying aggressively, making campaign contributions, then if you allow that to lead to an antitrust case, you're going to undo Parker all together.
Because every time, just as in this case, one person wins, one person loses, then the threat or the actuality of an antitrust action is there and that I understood was what Parker tried to prevent.
Unknown Speaker: Mr. Klein, could I go back to Justice Stevens' question and inquiry.
Now the courts below clearly found that the zoning law met the Town of Hallie test?
Mr. Klein: That's correct, Justice O'Connor.
Unknown Speaker: And there's no cross appeal--
Mr. Klein: That, that issue--
Unknown Speaker: --on that.
Mr. Klein: --that's not been argued before this Court.
Unknown Speaker: Although the respondent does raise in a, a footnote, I believe, the argument again, that Town of Hallie doesn't even apply.
Mr. Klein: That is correct as well.
Unknown Speaker: Do we need to address that, do you think?
Mr. Klein: I, I don't believe you do, but if--
Unknown Speaker: I mean if we have the concerns that Justice Stevens expressed that perhaps a zoning ordinance authority does not enable towns to purposely exclude everybody but one from a particular business.
Mr. Klein: --Well, Your Honor, I don't think the issue is here, but I think if the issue was here the answer is clear and let me, let me make, make that... what I mean by that paren.
That is this, this... the city didn't confer a franchise.
This was an open market and COA had developed a significant, very significant market share.
Under South Carolina law expressly, cities are encouraged to zone, to zone billboards.
That is affirmatively encouraged.
Now I submit that that must... it must take into recognition that there will be anticompetitive effects.
It may not be a monopoly.
It could be an oligopoly or what have you.
Second of all, South Carolina goes so far... and in this sense I think this is a stronger case than Hallie... it goes so far as to say with respect to Federal highways which the city has passed an ordinance, Federal-funded highways.
If a... which the State has an ordinance... if a city ordinance is stricter than the State's with respect to billboard zoning, the city ordinance trumps the State's.
So I think this is a clear case within Hallie.
Now let me also suggest if you start down this path... mind you we're now looking at the antitrust laws, and if you start down that path, courts are going to have to resolve a series of questions that go to the heart of the political process without any guidance from Congress whatsoever.
For example, how should the courts identify the substantive standard for deciding what State action is protected by Parker and what isn't?
Now we've talked some about bribery.
The Fourth Circuit seemed to think that favoritism toward a private constituent or perhaps some campaign contributions... that's a difficult area when it comes to Government relations... process.
How about causation?
How do we deal with causation in this kind of situation?
Must a majority of the legislators have been affected by the taint or just the margin by which it won?
And how about as to each individual legislator?
That is to say, does it have to be a sole motive, dominant motive, or some lesser standard acceptable?
We just think it's inconceivable that Congress wanted this Court and the lower courts to address all of those political concerns; and they're delicate ones under the antitrust laws.
Now in the time remaining--
Unknown Speaker: I suppose that you would say that, that this city council just went to a lot of trouble for nothing.
They could just have passed an ordinance and said that nobody but X may put up billboards in town, as far as the antitrust laws are concerned.
Mr. Klein: --I think that's true under the antitrust laws, Justice White.
Unknown Speaker: Yes, it may not be consistent with State laws or something--
Mr. Klein: Maybe--
Unknown Speaker: --but as far as the antitrust laws, they can do that.
Mr. Klein: --And it may violate the commerce clause or other provisions.
But I think that's right.
I think it's just not an anti... antitrust concern.
And of course, I mean as far as the antitrust laws go, this Court has recognized in numerous instances the State can give a sole franchise to a business; taxicabs, at... airports, to a cable TV station.
That's never been a question.
Now if the private party--
Unknown Speaker: Yeah, but do you think the zoning ordinance... the power to zone normally implicitly includes the power to grant exclusive franchises?
Mr. Klein: --I don't... I think, I think it may--
Unknown Speaker: I think you do.
Mr. Klein: --depending on the circumstances, yes.
Unknown Speaker: Well, what are the circumstances?
Mr. Klein: The circumstances are that if the city decides that one company--
Unknown Speaker: If the city decides it wants to do it.
It can't be the city's decision if you say the grant from the State embraces that, then the city always has that authority.
Mr. Klein: --It, it does have that authority I think.
Just as in, in--
Unknown Speaker: Just in franchises and fast food operations and billboards and--
Mr. Klein: --Under the antitrust--
Unknown Speaker: --motion picture theaters, all because they have the power to zone.
Mr. Klein: --Under the antitrust laws and I, I think--
Unknown Speaker: Yeah, but Mr. Klein, the... I thought the Parker rule always required that the State statute clearly articulate, very clearly articulate that the locality may replace competition with noncompetition.
Mr. Klein: --Well, that I think is a necessary consequence of zoning.
I mean Justice Stevens asked.
It may be true that the results of the zoning order--
Unknown Speaker: It... that may not be a clear articulation of local power.
Mr. Klein: --It may not, but I think this one was clear and I also would suggest that every zoning ordinance, if in fact there is a single chain and the city passes an ordinance, it's going to protect it just like a taxicab franchise and so forth.
I don't see that there's any difference--
Unknown Speaker: Well, the taxicab franchise authority doesn't rest on the zoning power.
Mr. Klein: --No, it doesn't.
Unknown Speaker: It rests, rests on a deliberate decision to have one operator in a particular field of business.
But I don't understand the State has made a decision that there shall be only one billboard operator in each city.
Mr. Klein: The city hasn't make that decision either.
Unknown Speaker: Or has it delegated the power to the city?
Mr. Klein: The city has made a decision that there shall be--
Unknown Speaker: There shall be zoning.
Mr. Klein: --spacing and let me look at Town of Hallie for you, because the Court was unanimous there.
In Town of Hallie what the State of Wisconsin told the city was that you could set up a sewerage service and you could define your market for service as you see fit.
It didn't say you could exclude competitors, didn't say you could only serve those people that didn't sweat in your market.
The Court had no trouble finding that it was authorized for Parker.
Now this case I think is easier, because the State has said you should enact these kind of ordinances and if yours is stricter than ours, we'll defer to yours.
Now if I could, in the limited time remaining, I would just like to say a couple of words about the Noerr... the COA liability and I think much of the--
Unknown Speaker: Could I ask you a certain... before you do that.
Did the city... were these ordinances passed pursuant to their zoning power?
Mr. Klein: --Yes, yes, they were.
Unknown Speaker: Okay.
Mr. Klein: Now if, if I, if I might then I, I think much of the discussion about whether there's a coconspiracy exception so to speak, it's two sides of the same coin so I think it applies here.
But let me... it applies to COA as well.
But let me make two brief points.
First of all, if the ordinances are valid under Parker, under Parker and Hallie, it follows automatically that COA, the private party, is protected under Noerr, and second, that COA's activities in any case are independently protected by the First Amendment.
And respondent's belated suggestion frankly prompted some questions that this case involves bribery or extortion is just flatly wrong.
As to our first point, that is the Noerr point simpliciter, the question is whether Congress... did it intend the Sherman Act to police lobbying activities even when it has no intention to police the resulting governmental restraint?
That's what Parker immunity means.
That question was answered 30 years ago in Noerr where the court held flatly that the antitrust laws have no concern with the methods used to influence valid legislative action.
It's a view that the court has never deviated from since and was recently reaffirmed in Allied Tube a couple of years ago.
Finally, and in all events, the judgment against the private petitioner, COA, must be reversed regardless of the city's protection.
The activities on which that judgment rests are constitutionally protected.
In this case, there is no allegation, no proof and no jury instruction to support a finding that COA bought these ordinances with a few relatively modest, properly disclosed campaign contributions made over a 6-year period.
Without that kind of express finding, campaign contributions are fully protected under the First Amendment.
They are, as Justice White said in United States v. Brewer, a routine and well-established part of our political process, often made with the expectation or hope that a legislature... legislator will champion a constituent's point of view.
I would reserve the balance of my time, Mr. Chief Justice.
Unknown Speaker: Very well, Mr. Klein.
Mr. Lewis we'll hear now from you.
Argument of A. Camden Lewis
Mr. Lewis: Mr. Chief Justice, and may it please the Court:
I disagree that this case has anything to do with lobbying, that this case is a case where there is far more than just the, as the Court has said in many cases, merely the solicitation or the asking of an ordinance to be passed.
Judge MacMahon in the very first order in this case said that the ordinances were but two of the overt acts of a conspiracy.
And when we get into the facts of the case and you see all of the things that were done... you see, for example, on the part of COA, there was a lot of nonordinance activity.
They gave away space so Omni could not compete.
They made disparaging remarks about Omni.
They interfered with Omni's receipt of goods.
They got secret information from the city and used it against Omni.
They procured frivolous litigation.
They stole or double-billed so as to give them an advantage and contrary to Mr. Klein, you'll find in footnote 4 of the Fourth Circuit opinion that there is indeed the exchange of billboards for favors in this case.
Unknown Speaker: I thought that was from Parker?
Mr. Lewis: This is for Noerr.
Unknown Speaker: All right.
Mr. Lewis: You... I would go back to Parker.
I was taking them in reverse order--
Unknown Speaker: Okay.
Mr. Lewis: --because that's just the way my notes ran.
So when we and I apologize... when we look at the... Noerr, when we look at whether or not there is an exception to Noerr, the sham exception, we don't just have lobbying.
We have conduct.
We have conduct that, and I think it's clear in this case and I think it's important, that the conduct of COA was directed to closing the legislative, administrative or judicial process.
Unknown Speaker: Well, what are you saying was a sham here, Mr. Lewis?
Mr. Lewis: Okay, what am I... I'm saying is the sham is the efforts and the... really if you want to get down to it, it's the prior agreement, the 1980 agreement.
Unknown Speaker: Well, that's, that's not a... to say that an agreement was, was a sham is not consistent with our cases.
Our cases talk about a sham exception as being the use of a governmental process in some way simply to delay without any hope of success.
Mr. Lewis: No, sir--
Unknown Speaker: Certainly these people had not only a hope of success, they succeeded with the city council.
Mr. Lewis: --On, on one they succeeded in the city council on one of the two ordinances.
They procured and went forward with frivolous litigation.
There was an unconstitutional finding of an ordinance which they required it go forward with it.
They, and I do say they had what I... they gave favors for billboards.
Unknown Speaker: How does that have anything to do with the sham exception, that they gave favors for billboards?
Mr. Lewis: --Because as I read the sham exception, the sham exception comes to play when the conduct that the individuals use is directed toward the foreclosure of the citizen from meaningful access to the legislative decision making process.
That's what the Fourth Circuit found; that they had denied our access, that the conspiracy between the two of them had denied our access so we had no right, we had no ability to go to the legislative process and therefore, that the whole process, that the whole process was a sham.
And it's biased the process.
You've used a lot of words.
They usurped the decision making process.
They shut down the machinery of the process.
They closed the process.
All they did... they did that.
Unknown Speaker: Well, where, where does all this language that you're using come from that they usurped the process, they shut down the process?
Does that come from our cases?
Mr. Lewis: Some of them and they--
Unknown Speaker: Well, what, what cases of ours do those two phrases that you just used come from?
Mr. Lewis: --Okay, biased the process comes from Allied Tube.
Usurps the process, I believe, comes from Motor Transport.
Shuts down the machinery was Justice Douglas, and I'm sorry I don't remember that particular case.
So those all come down... the Fourth Circuit particularly said in their case that when it forecloses a citizen from meaningful access to the legitimate decision making process, they said once that happens it's a sham.
And that's what we have.
Once that you take the process away, what, what... and I believe you'll find when you look at the amicus briefs... you'll find that the whole concept of Noerr they say is that the representation, the concept of representation depends upon the ability of the people to make their wishes known to their representatives.
That ability was gone.
From the... there was a longstanding agreement from 1980 before we ever came that we proved that the city and COA entered into such that in return for the favors--
Unknown Speaker: You were certainly able to make your views known to the city's representatives.
You say they were biased against you, but as a factual matter you were certainly able to make your views known.
Were you not?
Mr. Lewis: --We were able--
Unknown Speaker: Were, were you able?
Were you not?
Mr. Lewis: --We were able to go there--
Unknown Speaker: Were you able to make your views known to them?
Mr. Lewis: --No, sir.
We were not able to make our views known.
Unknown Speaker: I, I thought the record showed otherwise that--
Mr. Lewis: The record shows that we went to meetings that were closed, that were predetermined, that there was no ability for us to participate.
Unknown Speaker: --Well, okay... just, just a minute.
You say you went to meetings that were closed.
If they were closed, how did you get in?
Mr. Lewis: Closed in the fact that they... we went there and if you'll read the record, they said when we got there we were told what it would be.
We had no input into it.
We were told what it would be.
Unknown Speaker: That, that's quite different from being unable to make your views known.
The fact they didn't listen to your views or pay attention to them, doesn't mean that you didn't have, you didn't have some sort of a way of expressing yourself.
Mr. Lewis: Yes, sir, I think that if you have... if everybody sits there and they have their ears covered up and they turn their back to you and they say that you have the ability to talk, you might as well be talking to the wall.
I think that's not what we had the ability--
Unknown Speaker: Well, that will make a lot of legislative committee hearings subject to some sanctions.
Mr. Lewis: --No, sir.
No, sir, I don't think so, because in a legislative committee hearing and I think it's important.
In this case we had an agreement, a 1980 agreement between the city and COA, based upon the exchange of favors which said, we will never again allow anybody in here and any time you need us, Mr. COA, we'll use our power to keep them out.
We'll close the administrative process.
We'll close the legislative process to them and we'll do what you say.
They sold their office out.
And I think that's important and once you do that there is a sham.
Noerr-Pennington doesn't protect that.
Unknown Speaker: Mr. Lewis?
Mr. Lewis: Yes, sir.
Unknown Speaker: Is your only complaint that you were outmaneuvered?
Mr. Lewis: No, sir, we never got a chance to maneuver.
Unknown Speaker: Was any money exchanged?
Mr. Lewis: There were--
Unknown Speaker: In the record?
Mr. Lewis: --Yes, sir.
Unknown Speaker: What was it?
Mr. Lewis: All right, in the record you will find and contrary to Mr. Klein, there were free billboard space or discounted billboard space given to the councilmen which they did not... and you can look at it... they did not report as campaign contributions.
They were given special locations--
Unknown Speaker: How much was that?
Mr. Lewis: --That would vary according to the particular councilman, but it would go anywhere from $300 up to $1,000.
I don't know the exact amount.
You'd have to take your chart and you'd run it.
There was exchanges.
They didn't report it.
They got free and--
Unknown Speaker: They got paid $1,000.
How many people split the $1,000?
Mr. Lewis: --Well, there was different people had different amounts of free advertising space.
Unknown Speaker: All together it was $1,000?
Mr. Lewis: Maybe $1,500 altogether.
Unknown Speaker: Maybe $1,500.
Mr. Lewis: Yes.
Unknown Speaker: And that's all we're talking about?
Mr. Lewis: We're talking about... well, we're talking about--
Unknown Speaker: That's a real horrible deal.
Mr. Lewis: --No, sir, we're talking about more than that.
We're also talking about the fact that in the exchange they had the power of this monopoly billboard that made sure they get back into office.
There's no other billboard industry.
Unknown Speaker: They got this monopoly for free?
Mr. Lewis: They got the... they got the monopoly's power.
They got the use of the monopoly power in exchange for keeping the monopoly a monopoly.
Yes, sir, that's absolutely true in this record.
Unknown Speaker: Well, how does that get to the Parker case if they do something for free?
Mr. Lewis: All right.
The Parker case.
Unknown Speaker: If they do something for free--
Mr. Lewis: --If we go back over to Parker, you're coming in now and I do not agree that the Hallie, whether or not this is a State action or not State action is closed, because to get to Parker by its very nature you have to first determine, and we have in our footnote raised that question that's been fully briefed in the court below, and we do not believe for one instance that the zoning laws of the State of South Carolina allow for this economic--
Unknown Speaker: --You didn't cross-petition for certiorari though, did you?
Mr. Lewis: --We did not cross-petition for certiorari because in the petition for certiorari they raised the question of Parker and to get to the Parker particular question you must necessarily raise the question of whether Parker on its very foundation has met that requirement that it's State action.
So no, we did not.
We put it in our footnote.
One of the things I think is important, too, is as you look at this case and as we look at a jury verdict... we have a jury verdict.
We have a jury verdict based on a sham exception.
Unknown Speaker: The jury, Noerr?
Mr. Lewis: Yes.
And we have a jury verdict based upon the coconspirator exception to Parker.
So what we--
Unknown Speaker: Well, that's a... the issue is whether there is one.
Mr. Lewis: --Yes, sir, and the whole question... I'm... that's what... on Parker the whole question is whether or not there is a coconspirator exception to Parker.
Now, Mr. Judge MacMahon said, and it has been our position all along, that Parker does not come into play, because in this instance you do not show or do not have a clearly articulated State purpose that would allow people to conspire.
And once you bring in conspiracy and you show a conspiracy, Parker does not apply.
In your case of Parker, of course, and all these cases flow from that when it was said in Parker, it said that you did not have here before you that the, that the city was a coconspirator or was in conspiracy with the people.
And that's what starts all of this.
Unknown Speaker: I, I--
Mr. Lewis: Yes, sir.
Unknown Speaker: --You mean a conspiracy with the public officials to do something that's not in the public interest I... that they don't really believe is in the public interest?
Mr. Lewis: It's a conspiracy with, with the public officials to... in that, in this case... was to eliminate any access or competition with a preference--
Unknown Speaker: What if, what if the public officials have the, the famous attitude what's good for General Motors is good for the country?
What if, what if they really think this local company employs a lot of local people?
It's local money, local investment?
Suppose they think it's, it's in the interest of the whole city that the billboard trade should be monopolized by this particular company?
Why isn't that a valid public purpose?
Mr. Lewis: --I think that if that is what happened which is not our case that you may have... there are ways to go about passing ordinances that are, that are legal.
I'm not about to say that.
Unknown Speaker: So just favoring a particular company and excluding other companies simply because you've agreed with one company can be all right?
Mr. Lewis: Simply agreeing, that's, that's, that's what we call the persuasion.
You agree to the persuasion of one over the persuasion of another.
That's, that's, we have no qualms of that.
We don't have that here.
Unknown Speaker: No, but I favor this company, because I know the people.
They've been good citizens of this community.
They're not some fly-by-night outsider who's coming in.
I think that it's in the interest of the community to favor this company.
Why is that... why is that not a public, public motive rather than a private motive?
I mean can you draw the line between the two?
Mr. Lewis: Yes, sir, I certainly can draw the line.
And I draw the line in this case is when they come together and they make that agreement prior to any... they've had that agreement, that 1980 agreement and I still think that's very important.
That's before anybody was here and it was when there was another billboard company was coming into town.
The COA, Mr. Cantey, went to the city officials and he got a promise from them that anytime he needed their protection, they'd give it to him and in return he would make sure that they had billboard space, that they would have discounted billboard space.
That's in the record.
So you have this agreement and that agreement was put into effect in this case as soon as Omni came to town.
It was put into effect--
Unknown Speaker: Did the court of appeals think there was such an agreement?
Mr. Lewis: --Yes, sir.
They talked about it.
If you'll read their opinion, they talk about that agreement.
They even quote the letter that set up that agreement in 1980.
They talk about that and they show that agreement and they show how it went forward.
The court of... the court of appeals' opinion is very good.
It's a thorough opinion.
It talks about the facts.
It talks about in footnote 4 the fact that it was trading, trading billboards for favors.
We even had the fact that they would, COA, would go out and paste over billboards, validly sold billboards--
Unknown Speaker: Where is, where, where do we find the discussion by the court of appeals of the 1980 agreement?
Well, don't take up a lot of your time to try to find it.
I just hadn't noticed any particular discussion about it and I wondered what you were relying on, but--
Mr. Lewis: --I'm relying on page 13a of the petition for cert and he talks about in December 1980, he wrote Mr. Naeggele another outdoor advertising... and that's the agreement we're talking about.
Unknown Speaker: --Did, did the court of appeals characterize it as an agreement?
Mr. Lewis: At the next, at the next, the quote right on that same page, that the, the, Cantey had testified that he sought these assurances from the mayor regarding the desired ordinance in order to keep Naeggele out of Columbia.
Assurances... that to me that's an agreement right there on page 13a.
That's what they say and that's the discussion of that very letter that I'm talking about and that is where I'm referring to.
Unknown Speaker: Thank you.
Mr. Lewis: And of course it was in our opinion a prior agreement for private benefit.
Unknown Speaker: Suppose a congressman from Detroit agrees with General Motors that, that he thinks it's, it's in the interest of General Motors and hence of his district to keep out all foreign car imports and he says, you know, I, I... that's what I'm going to do.
And the congressman says, is that contrary to public policy?
Mr. Lewis: --Just the pure agreement?
Unknown Speaker: Yeah, to favor a particular local company.
Mr. Lewis: We don't... and I guess I'm not being clear... I, I do not think that favoring one over the other in what we call the, the... a legitimate legislative process, Having that process and you going into it and winning over the congressman by your persuasion, by merely persuading him, that's nothing wrong with that.
We don't have that.
We have, first of all, we have an arena that we can't even get into and a, and a congressman that has in effect been bought.
So no, we don't even have that particular instance.
Unknown Speaker: The, the congressman would have to talk to Japanese automakers before he could agree with General Motors--
Mr. Lewis: No, sir.
Unknown Speaker: --let's keep out Japanese imports.
Mr. Lewis: No, sir.
What I'm saying is in our case we don't have the... he can refuse to talk to them, but the refusal to talk to them is his choice, is his... he is the congressman and there... he has put his... the agenda out there as to cars and he's done that and you get to talk to him.
The Japanese try to talk to him and he can refuse to but they have the opportunity to try to talk to him.
He hasn't sold his office out.
He hasn't said to the General Motors, because you give me free cars, I am never going to talk to the Japanese and I promise you because of those cars and you keeping me in office and using your power, General Motors, I'm going to make sure that I do everything you want me to.
That's what we have here.
Unknown Speaker: But as I understand your case, you're not claiming the individual councilmen are conspirators.
You're claiming the city is, aren't you?
Mr. Lewis: I'm complaining that the city is the... is in the conspiracy through the--
Unknown Speaker: The conspiracy is between the city and your competitor?
Mr. Lewis: --That's correct, through their... they can only act through their actors.
Unknown Speaker: That's right.
Mr. Lewis: That's correct.
I, I can't talk to the city except through their actors and they... and their actors... for example, if you look and see what the city did to us, that's pretty important I think.
If you look what the city did, they did far more than just passing an ordinance.
They... Mr. Finlay... he berated Omni on the radio and at meetings.
You'll read the testimony and they said that you couldn't get a word in edgewise, that COA sign locations... they gave them special treatment sign locations.
They let them have historic zone sign locations.
They gave them secret information that allowed them to get sign locations.
I don't know if you know about the moratorium.
It was, it was a secret moratorium that was written on the back of a napkin on March 10th and it was passed by the city.
It was a moratorium, and then on March the 9th, the day before, the COA went out and got sign locations in the very area that this moratorium covered.
2 weeks later the moratorium mysteriously changed... no one takes any credit for it... to become a larger moratorium, be city-wide.
On the day before that or 2 days before that, the COA is out getting more sign locations in this area that is to become a moratorium.
So they had secret information.
They harassed... even after Judge Cureton issued his order saying that the zoning or that the moratorium was unconstitutional and in that order he said, you... they will... you're enjoined from not... from keeping them from building their signs whatsoever.
They get to build their signs no, no matter what.
They went out and they harassed them, Omni, us.
They arrested Omni, us.
They threatened Omni, us, even in the face of that order of Judge Cureton.
They then went ahead and--
Unknown Speaker: Excuse me, when you say they, did... did you... I forget the numbers of people on the city council... did you establish that it was a majority of the city council--
Mr. Lewis: --Yes, sir.
Unknown Speaker: --that was in effect with free billboard space and all that thing.
Mr. Lewis: Yes, sir.
We certainly... free or discounted billboard space and the use of the power of the COA.
Yes, sir, we surely did.
Now... and also you'll find in the record that the city was advised by their lawyers that, that this was an unconstitutional ordinance.
They passed it anyway.
They were advised that they should not... we then filed suit against them.
They were advised that you'll lose your suit and they said... it's in the record... continue that litigation, cause we need the delay.
We need to keep the delay so Omni can't come in here.
Now that's what we have in the record.
You can... you start with that first agreement and you go forward and you look at all the action as Judge MacMahon clearly said, the ordinances are but two of the overt acts of this conspiracy.
If you look at the Fourth Circuit, and they went into a big discussion about the evidence and I'd like you to look at it, because it's very good.
And you have the question here and they say, well, we're going to somehow chill the right to petition.
We're going to make people scared to petition.
Well, I think the way that I look at this case that to do anything other than affirm this case chills the right to petition.
Because what this case does, if you do anything but affirm it seems to me is you put the stamp of approval on a factual scenario that eliminates, that eliminates the process and closes it and turns it over to private individuals.
Now that's what we have seen in the cases that we've tried not to do.
We try to keep the process open and if we lose on a playing field, we lose, but we've got to get onto it.
And when you close that playing field, when you say that you can trade your power, trade your billboards, trade that to keep your monopoly and to keep them in power, then there is no process.
It's not unlike many of the cases that you already talked about; Allied Tube, Motor Transport, and those type cases.
In closing, I'd like to make a couple of points.
And one of them everybody seems... well, Mr. Klein doesn't but when you read the writings and the cases... everybody seems to say that bribery should not be allowed.
It's a bad word.
Bribery... we should not allow it.
That should and... subject the bribery people to antitrust liability.
Okay, did you ever... if you go behind bribery, look and see what it is.
You have giving of money for favors.
What, what, what it has to do with that bribery.
It isn't that the guy gets rich off of the money that's so offensive.
It's the fact that he has eliminated and sold his office.
He has in effect... what we have here... he has closed the process.
So what bribery is and when you break it down, it's nothing more than paying money to close the process and I don't think anybody... at least from the writings that I've seen... wants to say that the antitrust, Noerr-Pennington, or the Parker should be okay even in the face of bribery.
And if we look at that, if we look at the Affiliated Capital case from the Fifth Circuit where it was en banc with a lot of judges, you see a thorough discussion of this, these principles.
You see one in the Fourth Circuit and it comes down to, I think in this case, they're asking you to draw these lines.
And I'd point to one last point.
And that is if you look at the charges requested by the COA as to what you, the jury must find, to make us liable, this is what it says.
It's on 172 of the Joint Appendix.
It says, this protection of the citizen fails, however, when one or more of the public officials joins in an illegal agreement or a conspiracy with the person seeking the political action.
That is what they ask and said that their protection failed when that happened.
That request for charge was theirs.
That very statement or words to that effect was charged to the jury and the jury came back in an affirmative, yes, they conspired.
And you say under what criteria could they find a conspiracy?
It's very important, I think, for the Court to look at Judge Perry's instruction on conspiracy, because we had to overcome the strictest of burdens and this is on... found on page 76 of the Joint Appendix and it says, that we the plaintiff must not just prove a factual scenario that supports a conspiracy.
We must prove a factual scenario that doesn't allow or doesn't... can't be understood to also be innocent or nonconspiratorial.
Now that's a heavy burden.
Unknown Speaker: Yes, Mr. Lewis, but the court of appeals affirmed in the Noerr aspect of the case on the sham theory rather than the coconspirator theory, didn't it?
Mr. Lewis: That's correct.
Now there is a separation in the case law of that, but the unobjected to charge on the sham exception is found at page 81 of the Joint Appendix, and this is what it says and this was unobjected to.
No one took issue with it.
If you find the defendants conspired together with the intent to foreclose the plaintiff from meaningful access to a legitimate decision making process with regard to the ordinance in question, then your verdict would be for the plaintiff on that issue.
So, when they--
Unknown Speaker: Thank you... Mr. Lewis, your time has expired.
Please sit down.
Mr. Klein, do you have any rebuttal?
Rebuttal of Joel I. Klein
Mr. Klein: Very briefly, Mr. Chief Justice.
I regret burdening the Court with issues of the record, but I view bribery as a very serious charge.
And I don't think it should be made without support.
First of all, the issue of how this case was tried, I suggest the Court look at page 59 of the Joint Appendix, the respondent's argument to the jury and the instructions have nothing to do with bribery.
More significantly, the issue of free campaign contributions, the facts--
Unknown Speaker: Mr. Klein, would you help me on the defendant's requested charge that your opponent referred to?
Do you think that's a correct statement of the law?
Mr. Klein: --I don't, Your Honor, but it came after a variety of other legal positions had been rejected.
Unknown Speaker: So you don't endorse that position anymore?
Mr. Klein: We don't, no, sir.
Second of all, the issue in response to Justice Marshall about what these campaign contributions are, I just say briefly... the Court can check the record... there was one contribution of free billboard space to the mayor when he was running for city council in 1978.
The mayor declared that as a contribution on his campaign disclosure form that's in the record.
Unknown Speaker: More, more, more than one billboard?
Mr. Klein: --There were six billboards.
Unknown Speaker: Six billboards.
Mr. Klein: Six billboards.
Second, there were two reduced fee, that is, approximately a one-third discount off the official rate, that is the card rate.
Both city council members that received that... they were after this litigation was instigated... both city council members who received those declared them as expenditures on their form because they paid, that is, their staffs paid $550 out of $750.
Next, respondent in question, in answering you, Justice Scalia, says they proved that a majority was involved.
Let me say two things on that.
The court of appeals, their brief's position was one was enough.
But second, they pointed out that three people that they said made up the majority.
One of those three people was Mr. Adams, who the record will show received no campaign contribution at any time from any of my clients.
Unknown Speaker: Mr. Klein, are telling us, because this is such a sharp contradiction here, that there is nothing in the record to support your opponent's claim that there were some either discounted billboards or free billboards provided that were not declared?
Mr. Klein: There were none that were not declared.
The discount, Justice Stevens, was... in other words, say the billboards would have cost $600--
Unknown Speaker: Well, you can kind of say yes or no, I think, to my question.
Mr. Klein: --They were declared as expenditures which they were paid for, the ones that were discounted.
Unknown Speaker: In other words, if they... if the price was $1,000 and they paid $600, they reported the payment of $600, but they did not report the fact they got a $400 discount.
Mr. Klein: That's correct.
Unknown Speaker: I see.
Mr. Klein: Okay, now, and one of the three people who is identified as a so-called conspirator received no campaign contributions.
And finally, let me end by suggesting to the Court, if this was a case about bribery, there's a Federal law right on point.
It's the Rico statute.
They could have brought this case and proved it.
And what's going on here and what I think everyone will try to do with the antitrust laws is you start with Government regulation that is necessarily and frequently restraining.
It's better to have... instead of having to prove corruption, you smuggle a corruption case under the antitrust laws.
Congress has spoken in one area.
There's no reason to open up another.
Unknown Speaker: Mr. Klein, would this case have come out the same way in the Fifth and Eighth Circuits?
Mr. Klein: In the Eighth Circuit?
Unknown Speaker: Yeah.
Mr. Klein: I don't believe it would in the Eighth Circuit.
It certainly would not in the Ninth Circuit.
Unknown Speaker: How about the Fifth?
Mr. Klein: In the Fifth this case probably would have come out under Affiliated Capital the same way.
But in the Eighth Circuit, the Ninth Circuit, and the Seventh Circuit, in fact, in Metro Cable--
Unknown Speaker: Have there... are there cases that would show that, that are in direct conflict with the decision alone?
Mr. Klein: --With this decision?
Unknown Speaker: Yes.
Mr. Klein: Yes, there's a case by Justice Kennedy in the Ninth Circuit.
There's a case in the Seventh Circuit in Metro Cable.
There's a case called Boone in the Ninth Circuit and several others.
Unknown Speaker: Is the Fifth Circuit the only one that is, that has so recognized a so-called conspirator?
Mr. Klein: Coconspirator exception?
Unknown Speaker: Yes.
Mr. Klein: I believe that's so, although a variety of... even in the Fifth Circuit, there's some inconsistencies, but I believe they are... now they in the Fourth.
Unknown Speaker: The Eighth has never approached--
Mr. Klein: The Eighth in a case called Kay Jeer I think has talked about it but not with the same clarity as the Fourth, that is, it hasn't demarked the lines.
Unknown Speaker: --Well, there's some pretty interesting language in the Eighth Circuit case against you, isn't there?
Mr. Klein: There is some language, that's correct.
But I also think there's other language in there that's helpful.
Unknown Speaker: Did either party request instructions on the elements and definition of bribery?
Mr. Klein: No party requested such instructions, Justice Kennedy.
Chief Justice Rehnquist: Thank you, Mr. Klein.
The case is submitted.
Argument of Speaker
Mr. Speaker: The opinion of the Court in No. 89-1671 City of Columbia versus Omni Outdoor Advertising, will be announced by Justice Scalia.
Argument of Justice Scalia
Mr. Scalia: Omni Outdoor Advertising Incorporated entered the billboard market in the City of Columbia, South Carolina in 1981.
In response to the new competition, Columbia Outdoor Advertising Incorporated, COA which at that time controlled more than 95% of the Columbia market, lobbied city officials to enact zoning ordinances restricting billboard construction.
After such ordinances were passed, Omni, the new entrant, filed suit against COA and the city.
Both petitioners here, under Sections one and two of the Sherman Act alleging that the ordinances were the result of an anti-competitive conspiracy.
Omni obtained jury verdict on all counts, but the District Court set the verdict aside and entered judgment for petitioners on the ground that their activities were outside the scope of the federal anti-trust laws.
The Court of Appeals for the Fourth Circuit reversed and reinstated the jury verdict.
In an opinion filed today, we reverse the Fourth Circuit's decision and hold that both the city and COA are immune from federal anti-trust liability for their activities involving the billboard ordinances.
In 1943, in a case called Parker versus Brown, we held that the governmental acts of the states are not covered by the Sherman Act.
Later cases have recognized that this immunity also extends to the governmental acts of municipalities when they are acting pursuant to a power delegated by the states to restrict competition.
We hold that the grant of the zoning of authority qualifies as such a delegation so that the city's zoning actions have Parker immunity.
The Court of Appeals said, however, that there is a conspiracy exception to Parker that strips the city of its immunity since the city conspired with officers of COA to impose the anti-competitive ordinance.
We hold that there is no such exception.
A conspiracy exception would render Parker immunity and nullity if it applied to all agreements between government regulators and private parties.
In our democratic system, it is both inevitable and desirable that public officials agree to do what one or another group of private citizens urges upon them, nor is it feasible to limit a conspiracy exception to those agreements with private parties that are corrupt in the loose sense that they further private interests at the expense of the public interest.
Virtually, all government regulatory action is open to such a general charge, and if public officials had to risk ex post facto judicial determination of liability on the basis of such a standard, state action would be hamstrung.
And finally, it would not be proper to establish a conspiracy exception limited exclusively to actions taken in exchange for bribes or for some other violation of law, since it is the function of the Sherman Act to regulate private trade restraints not to supplement government ethics laws.
In addition to finding the city immune under Parker, we find the private company, COA, immune under a car larry to Parker known as the North Pennington doctrine.
Pursuant to that doctrine, the federal anti-trust laws do not regulate the conduct of private individuals in seeking anti-competitive action from the government.
The Court of Appeals held that that doctrine does not apply hear because COA's lobbying activities with respect to the ordinances, were a sham.
That was error.
The sham exception to the North Pennington doctrine applies only when a private party uses the governmental process not for the genuine purpose of achieving the governmental action requested, including anti-competitive governmental action but rather for the purpose of causing competitive harm.
A good example would be the regular filing of frivolous objections to a competitor's request for government licenses, knowing that the challenges would be denied but hoping to cause the competitor expense and delay in defending against.
Here, of course, COA's lobbying was not a sham.
If anything, it was too much in earnest.
Finally, we reject Omni's suggestion that we adapt a conspiracy exception to North Pennington for largely the same reasons that we have rejected such an exception to Parker.
The decision of the Court of Appeals for the Fourth Circuit is reversed and the case is remanded for further proceedings consistent with our opinion.
Justice Stevens has filed a dissenting opinion which Justices White and Marshall have joined.